Cuba’s economy still anemic

An old joke I heard for the first time more than 20 years ago in Havana says that the three biggest achievements of the Cuban revolution are health, education and low infant-mortality rates, and that its three biggest failures are breakfast, lunch and dinner.

A new study by the Brookings Institution think tank shows that, two decades later, things remain just as bad, if not worse.

Consider some of the findings of the study, titled “Reaching out: Cuba’s new economy and the international response.” It was written by Richard E. Feinberg, a former Clinton administration Latin American adviser who supports growing international development cooperation with Cuba, and who traveled to Cuba earlier this year and interviewed Cuban officials, academics and average citizens.

Despite big increases in tourism, some investments in mining and massive subsidies from Venezuela, “the Cuban economy remains in the doldrums.” The main constraint slowing the Cuban economy is not U.S. trade sanctions, but Cuba’s own outdated economic model, inherited from the Soviet Union, of central planning, it says.

Cuba’s average income is one of the lowest in Latin America: 448 pesos a month, or $20 at the official exchange rate. University graduates are in a frantic search for jobs, such as hotel doormen or waiters, that offer access to foreign currency, or they want to emigrate, it says.

Measured in per-capita income on a purchasing power parity basis, Cuba’s per capita income is $6,000 a year. By comparison, it is $8,000 in the Dominican Republic, $11,000 in Brazil, and $14,000 in Mexico, Chile, and Uruguay, according to United Nations figures.

Industrial production stands at only 43 percent of its 1989 levels, and employs only 10 percent of today’s workforce. Exports of goods are a paltry $3 billion to $4 billion a year, only slightly more than Venezuela’s annual oil-for-doctors subsidies to the island.

Cuba’s external debt is “alarming.” According to Cuba’s Central Bank, the island owes $8.9 billion to foreign creditors, plus another $7.6 billion in “frozen debts” that have not been restructured in more than two decades.

Cuba has developed service industries — such as tourism, which has grown to 2.5 million visitors a year — and exports doctors to Venezuela through government-run oil-for-doctors swaps. The services sector now accounts for 81 percent of the island’s economy but is not enough to get the economy on its feet, the study says.

Despite Cuban President Raul Castro’s recently announced pro-market economic reforms — including allowing certain forms of home ownership — implementation of these reforms is slow and erratic amid fierce quarrels between hard-liners and reformers within the regime, it says.

Feinberg’s study proposes supporting economic reforms in Cuba through a growing involvement of international financial institutions, such as the International Monetary Fund, and by lifting U.S. barriers to these institutions’ technical assistance to Cuba.

Interestingly, Cuban officials expressed some interest to engage with the IMF and the World Bank, especially since these institutions have conceded that “there is no single model of development,” and have gained experience from their recent advisory roles in Vietnam and Nicaragua, it says.

No principled position

“When asked by the author for the Cuban position regarding IMF membership, a senior official of the Cuban ministry of foreign affairs responded: ‘Cuba has no principled position against relations with the IMF or the World Bank,”’ the study says. It was the first time Cuba has made such a statement, it says.

My opinion: If Gen. Castro’s military dictatorship wants IMF help, after decades of lashing out against that Washington-based institution — it shouldn’t be denied technical assistance. It would help build bridges with reformers within the regime.

Those who claim that the Castro brothers are still popular, and that Cuba has a model education system, should be asked: If Cuba’s leaders are so popular, why don’t they dare hold free elections? And if Cuba’s education system is so good, why doesn’t Cuba participate in the world-wide PISA tests of 15-year-old students? The answer is simple: Cuba’s entire propaganda campaign, unchallenged on the island because of rigid state censorship, would not hold up to the most basic independent scrutiny.

Andres Oppenheimer is a Latin America correspondent for the Miami Herald. Distributed by McClatchy-Tribune Information Services.

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